#50 Four pricing lessons from Business Chicks!

Lots of you are enjoying the real life pricing lessons, so here’s another…..

I’m a premium member of Business Chicks and recently got this email.
In essence the email announces a price increase for the annual premium
membership. But not for everyone. Existing members get to renew at the
current rate, and with no catches!

Now
most of you know that I’m an advocate for small business price rises,
not because I want us customers to pay more, but because most small
businesses woefully under-charge, and as a result of their ‘generosity’
they make very little money.

So
it’s very unlike me to find an example of a business that hasn’t raised
prices and hold it up as a good example. But today that’s exactly what
I’m doing.

This Business Chicks email is a clever pricing tactic which you might be able to use yourself.

Here’s why it works:

1. It locks your current customers in without handcuffing them

The
email doesn’t explicitly say this – it doesn’t need to  – but if
premium members cancel and rejoin they will do so at the higher annual
fee. So if they’re umming and ahhing about whether to continue their
membership, the underlying threat of a price increase might sway them to
stay.

Think about your business, are existing customers leaving? Could you convince them to stay by doing this?

2. It rewards loyal customers and early adopters

The
trouble with a lot of offers is that they reward new customers rather
than existing customers. If you think about it you’ve probably seen far
more “joining” discounts (think gyms!) than you have longevity bonuses.
It’s because membership businesses (wrongly, but that’s a subject for
another day) tend to focus only on new members.

By
freezing your membership fees for existing customers you are rewarding
them for their loyalty. And if you are a relatively new business, you
are rewarding them for buying into the program when it was new. But you
need to tell your customers that you have done it. And that’s what the
Business Chicks’ email does so neatly.

What happens in your business. How are you rewarding your loyal and early customers?

3. It reminds people they are members and should use it!

One
of the problems with membership programs is that people forget that
they have the membership (seriously!) so they don’t use it. Does that
matter? Yes. If they don’t use it, they won’t see the value in it and if
they don’t value it they won’t renew. It’s that simple.

This email serves as a neat ‘remember you’re a member” note!

Think about your business. How do you encourage your customers to use their purchase?

4. It feels generous

Finally,
it just feels generous. When an email lands in your inbox giving you
something nice that you didn’t ask for, it’s good! As a business,
generosity that’s spelled out (‘we’re not increasing your price’) works.
The sort of generosity that’s meted out by small businesses in the form
of under-pricing doesn’t work as no-one know’s you’re doing it!

How can you do ‘generous’ without making it gimmicky?

PS
Kitchen @ The Business Bakery is coming soon and we can’t wait! Reply
to this email if you want to be one of the first to join!

Comments

comments